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July 2009

Where Will the Treasury Find the Trillions it Needs – That’s Easy!

In 2008, the U.S. Treasury sold about $700 billion in new debt to cover the budget deficit and the non-budgeted excess war spending.  In ’09, it has to raise about $2.0 trillion, nearly three times as much as in ’08.  And FY 2010 shows similar financing needs. There has been a lot of concern that foreign purchasers of the debt, on whom the Treasury has come to rely, will dry …Read More

Recession’s End Doesn’t Mean the Stock Market Is Out of the Woods

Jobless claims and continuing claims have peaked. Housing has bottomed. Auto sales are turning up. The alphabets (ISM, LEI, NAPM, MBA purchases, ICSC retail sales, etc.) are improving. The recession has bottomed. Hurrah. Now what? Historically, the past recessions since WW II had textbook stock recoveries. The recession ends and stocks rally as the economy recovers. The last recession ended in November, 2001. However, the stock market subsequently plunged. It …Read More

A Better Solution to the Debt Crisis

It is widely acknowledged that the crux of the economic crisis in the U.S. is too much consumer debt.  The attached chart shows how that debt ballooned over the past decade. If the government is going to put the country into $6 trillion of additional debt, at least they should aim it at the crux of the problem.  $6 trillion is approximately equal to $20,000 per American citizen.  Instead of …Read More

Be Careful of Consumer Stocks

Many consumer stocks have rallied to 52 week highs  (when the Dow was at 13,000 and the S&P around 1300).  Many have doubled and tripled while the S&P recently peaked to around 950, up 40% from its March low. Consumer stocks historically lead a recovery and stock market rally. However, many are way ahead of the indexes and imply a return to 15-20% growth, as indicated by their 15-20 P/E …Read More